Buy house from parents?

CLAPTON

You haven't given the full financial or family circumstances here so I'm reluctant to comment.
However, it seems to me that your sister paying a reasonable rent to your parents would resolve the situation especially if your parents said they would leave the house to your sister when they die.

Or maybe sell the house at the market rate and make some other provision for your sister.

too many unknowns here.

Bean_69_99

When i had a mortgage interview recently i was told by the advisor that if you buy a house from your parents at a lower price than the valuation the mortgage you can get will have a better LTV as the difference between value and price equates as 'deposit'. Apparently just a way around things if your buying off family...

example...

valuation: 100k
Price paid: 50k

Mortgage = 50k, but you can get a 50% ltv mortgage deal?

I was unsure of how accurate this was and am struggling to see the logistics of doing this and how they would be affected by CGT and IHT?

00ec25

CLAPTON wrote: »

sadly NO, this is NOT correct.

you are of course quite right, my last post was rubbish. I must give up posting when I'm tired.

Rockporkchop

CLAPTON wrote: »

However, it seems to me that your sister paying a reasonable rent to your parents would resolve the situation especially if your parents said they would leave the house to your sister when they die.

Or maybe sell the house at the market rate and make some other provision for your sister.

Absolutely agree with this. If your sister is going to get the house eventually anyway, what is the point of getting a mortgage, paying for surveys and mortgage fees etc and your parents paying CGT? Why doesn't your sister just pay a decent rent, or even better, pay enough into your parents' account to at least cover their mortgage every month. She would gain the same amount of "independence" by doing that as if she was being handed half a house for free.

Your parents are being too kind, if it was me I would sell the house for £85k, politely tell the sister that the party is over and then go on a world cruise. Life is too short to work all the hours just to subsidise their perfectly capable adult offspring.

Edit: Oh and I take it you are paying a decent amount of rent to live at the family home too?

Lady_Hamilton

A few points to note:

1. CGT will be payable on any profit made from the value of the property when title was transferred to them until they dispose of this house.
2. Even if you sell the property to your sister for 1p, the market value of the property will be used to work out capial gains tax.
3. You mentioned that the property was transferred to your parents whilst your aunt was living there. Can I ask how long your aunt lived in the property and the circumstances surrounding this because a good tax adviser will be able to argue that your parents provided the aunt with a home, so that the state would not have to pay if she went into a care home (this has been used b4 by tax advisors to bring the CGT liability right down).

Hope this helps,

LH

Rikki

typeractive wrote: »

Ahhhhhhh right - now a' gets ya!

Well that all sounds much better!! :j:j:j

Now what I need to do is check ma sis can get a mortgage sorted (and stick to it), and see if ma folks would be willing to do it. They aim to leave both me and my sis a house when they are gone, though they are working sooooo hard it's unreal (seriously, it's wrong for people to work so hard at this stage of their life). My sis would gain some independence (in terms of finances and commitment), and my mum and dad could cut back on work hours, and spend more time with each other.

Thanks very much indeed - I'm sure I will still have more questions!!
:beer:

One thing to think about is:- if your sister does get the mortgage on the house but doesn't keep up the payments, the house could be reprocessed and you could loose your inheritance.

Is your sister able to get a mortgage?
Whose name would go on the title deeds?
How would you protect your inheritance?

typeractive

Rockporkchop wrote: »

Absolutely agree with this. If your sister is going to get the house eventually anyway, what is the point of getting a mortgage, paying for surveys and mortgage fees etc and your parents paying CGT? Why doesn't your sister just pay a decent rent, or even better, pay enough into your parents' account to at least cover their mortgage every month. She would gain the same amount of "independence" by doing that as if she was being handed half a house for free.

She pays rent, the idea was to release a larger cash sum at the moment, as opposed to accruing funds over a longer period of time. She would only be able to afford a little mortgage I would imagine, so paying over the top is probably out of the question (as much as I like the idea).

Your parents are being too kind, if it was me I would sell the house for £85k, politely tell the sister that the party is over and then go on a world cruise. Life is too short to work all the hours just to subsidise their perfectly capable adult offspring.

Indeed - they very much are. I know what I would do also - though of course that is all irrelevant. We all have our own aspirations, this is my parents, as much as I disagree with it.

Edit: Oh and I take it you are paying a decent amount of rent to live at the family home too?

I'll assume that you're asking out of curiosity? I am paying more than a fair share, I also pay for extra bits and bobs that I make more use of than anyone else. I will continue to pay a (reduced) rate of board when I get my own place also, until I am fully settled in. If I could do more to help my parents financially there is no doubt I'd do it - hence why I am investigating all of this. They have not asked, not even mentioned a button! I would just like to free up some money somehow.

typeractive

Lady_Hamilton wrote: »

A few points to note:

1. CGT will be payable on any profit made from the value of the property when title was transferred to them until they dispose of this house.
2. Even if you sell the property to your sister for 1p, the market value of the property will be used to work out capial gains tax.
3. You mentioned that the property was transferred to your parents whilst your aunt was living there. Can I ask how long your aunt lived in the property and the circumstances surrounding this because a good tax adviser will be able to argue that your parents provided the aunt with a home, so that the state would not have to pay if she went into a care home (this has been used b4 by tax advisors to bring the CGT liability right down).

Hope this helps,

LH

Hi LH,

I would need to re read some of your points there for a greater understanding, though thanks for the reply. My great aunt lived there probably for around the last 10 years of her life - maybe a wee bit less.

Cheers

typeractive

Rikki wrote: »

One thing to think about is:- if your sister does get the mortgage on the house but doesn't keep up the payments, the house could be reprocessed and you could loose your inheritance.

Yes - something to consider, and I've had a good few chats with my sister about the importance of any such moves for the family overall.

Is your sister able to get a mortgage? - yes, she should be able to get a small mortgage.
Whose name would go on the title deeds? - her's I would imagine.
How would you protect your inheritance? - well mine would be the other house, assuming that is not affected. Though being sincerely honest I'm more bothered about my folks now rather than reaping the luxuries in the future - hence why I want to buy my house all on my own, I've worked and saved hard, played everything by the book whilst a lot of my mates just waste their money (IMO at least). I still get to do fun things of course - I just spend wisely.

Rockporkchop

I'll assume that you're asking out of curiosity? [/QUOTE]

Oh yes, just curious.

What do I know anyway - all I got left in the will was a £5200 funeral bill!!